CBN Vows to Increase Loans to Farmers as Cardoso Unveils New ACGSF Board
- The CBN has promised to provide more credit facilities for farmers in Nigeria, noting that agriculture receives less than 5% of banks’ lending
- Governor Olayemi Cardoso inaugurated the new ACGSF board, describing it as a fresh start for improved agricultural financing
- Both Cardoso and board chairman Dr Olusegun Oshin emphasised the need to support smallholder farmers who face major credit and storage challenges
Oluwatobi Odeyinka is a business editor at Legit.ng, covering energy, the money market, tech and macroeconomic trends in Nigeria.
The Central Bank of Nigeria (CBN) has said it is determined to increase the share of credit going to the agricultural sector, which currently receives less than 5% of banks’ total lending.
This commitment was made by CBN Governor Olayemi Cardoso in Abuja on Tuesday during the inauguration of the newly reconstituted Board of the Agricultural Credit Guarantee Scheme Fund (ACGSF).
Cardoso said the event signalled a renewed focus on agricultural financing, noting that agriculture remains a key pillar of Nigeria’s economy.
Source: Getty Images
According to him, the sector contributes more than 20% of the country’s GDP and employs a large share of the population, yet continues to face limited access to formal credit.
The CBN governor explained that long-standing underfunding had constrained farmers’ productivity and growth. He said the apex bank intends to shift away from past approaches and ensure agriculture is better prioritised in the financial system.
Cardoso highlighted the role of the ACGSF, which guarantees up to 75% of agricultural loans issued by banks.
He said the scheme had, over the years, encouraged lending to farmers, including those considered high-risk by financial institutions.
He also recalled the 2019 amendment to the ACGSF Act, which expanded its share capital from N3 billion to N50 billion and widened the fund’s mandate.
The revised law now allows for a more inclusive board structure, adding representatives of farmers alongside government officials.
Cardoso said this inclusive approach is aimed at strengthening collaboration among policymakers, financiers, and the farming community.
According to him, the government’s Renewed Hope agenda presents new opportunities for the agricultural sector, with a vision to build a more resilient and technology-driven system that supports food security, reduces poverty and boosts wealth creation.
He noted that smallholder farmers, who make up about 80% of Nigeria’s farming population and produce most of the country’s food supply, still face significant credit challenges due to a lack of collateral or credit history.
The chairman of the newly inaugurated board, Dr Olusegun Oshin, said the scheme must pay closer attention to farmers at the grassroots.
Source: Getty Images
He noted that many rural farmers struggle without access to credit or proper storage facilities, despite being responsible for feeding the nation.
AFAN president calls for less than 5% interest loans
Meanwhile, the president of the All Farmers Association of Nigeria (AFAN), Kabir Ibrahim, has said that, beyond providing more credit facilities, what Nigerian farmers really need are credit facilities with interest rates as low as 3%.
Ibrahim told Legit.ng that current interest rates are pushing smallholder farmers out of business and stunting the country’s food production capacity.
He said:
“What we are really looking for is a policy where the banks or financial institutions will give loans to small farmers at very low interest rates for agriculture. And that is what we are asking for continually.
“When you borrow money at 32% as a farmer, there's no way you can pay that, no matter how long it takes. Big farmers who get access to loans from commercial banks, what they do is that if they make a profit of 10 million, 8 million of it will go to the bank as interest, and 2 million will go to the farmer.”
He said such rates are too high and not sustainable. He emphasised that if the CBN is serious about boosting food production through agricultural credit, it should ensure that farmers get long-term loans at between 1-3% interest rates.
“Agricultural loans should be within 1 to 3% interest rates. And then you should have like a four or five-year moratorium. Then you can look at the business, and you can see it growing. This is what happens in all the other countries where you see some progress in agriculture,” he argued.
It should be noted that the agriculture sector has the second-highest contribution to Nigeria’s Gross Domestic Product (GDP), according to data from the National Bureau of Statistics. The accounts for 31.21% of the country’s GDP, trailing the Services sector.
FG moves to digitalise farmers' registry
Legit.ng earlier reported that the federal government has launched the National Digital Farmers Registry to harmonise the data of farmers and offer them extension services.
According to the government, the platform will help farmers improve planning of seasons, access credit facilities and practice climate-smart agriculture.
The Minister of Agriculture and Food Security, Abubakar Kyari, earlier said the project aligns with national food security goals and the Kampala Declaration on digital agriculture.
Source: Legit.ng
